One of the aspects any business must consider is how to handle bookkeeping.
Without appropriate bookkeeping, it is difficult to assess how well your business is doing on a day-to-day basis, and determine if there are costs that are exceeding budget or expectations. Presenting figures at year-end to your accountant is also made easier.
Starting Out – Spreadsheets
Unincorporated business, with no employees, and limited activity often use a spreadsheet to keep track of expenses. They are easy to set up, and most people already have the needed software.
This method doesn’t easily allow for any serious analysis of the information. As well, if a business is incorporated, needed information will be lost with this method, so it’s not advisable at that stage.
Many businesses will use desktop accounting software packages (such as QuickBooks or Sage). These applications are purchased for a one-time cost and are installed on your computer. There is usually a subscription charge if you plan to use the software’s payroll module.
Users log in to the software from on-site to enter sales, purchases, other transactions, and reconcile bank activity to the statements.
Accounting software also allows users to run reports in real-time, to see the current financial health of the business, and to provide to an accountant for tax purposes.
Cloud-based software allows all the same features of desktop software, but with the flexibility of being able to work anywhere with web access. This also allows people at multiple locations (for example an off-site bookkeeper) to easily work on or review information at the same time.
Having online accounting software can mean that if there is an outage at the service provider, the accounting software may be inaccessible. If you’re using the software to complete sales in real-time, this may cause serious problems.
The choice of which software solution is right for your business is one that is in part driven by your needs, and in part based on your comfort. Keep in mind that the right decision for a business may change over time. I would recommend discussing this with your accountant on an annual basis to see if your needs have changed.
Having someone else do your books frees up time as an owner. Your time is valuable. You could spend it doing bookkeeping or you could spend it looking for new clients. If you’re looking for a qualified bookkeeper, please get in touch.